background
District heating is considered the heating of the future. But some tenants are being caught off guard by enormous sums in their annual bill. Are the suppliers claiming more costs than they actually have?
“They gave us a lot of trouble,” says Bettina Böttcher on the phone. She is sitting in her Wedel apartment in Schleswig-Holstein with her neighbor Sabine Plohmann. The two women are angry. Because her last additional payment for additional costs is quite significant: around 1,600 euros for Bettina Böttcher, and almost 2,000 euros for her neighbor, who lives in a larger apartment.
Heating is done remotely with gas. This means Böttcher’s total heating costs for 2022 will be around 2,800 euros. She refuses to pay them and has called in the tenants’ association.
Heat from power plants or Industrial facilities
Such cases are not uncommon for district heating customers. Before district heating heats houses or heats water, it is generated centrally, often in power plants or as waste heat in industrial plants. The district heating then reaches the apartment via pipes, so you don’t need your own heating system.
Currently, the majority of this energy is still produced from gas or oil. The price for district heating, for example, is also linked to the stock market price for gas. At the beginning of Russia’s war of aggression on Ukraine, the price of gas rose sharply in 2022. The market has now calmed down a lot, but the price for district heating remains high.
supplier with Monopoly position
Simply switching providers for a better offer doesn’t work here. District heating suppliers have a monopoly position. Customers are essentially at the mercy of a provider, and contracts are usually concluded over a long period of time. That is the one point of contention with district heating.
The other has to do with how the prices are set. The Federal Cartel Office has now opened proceedings against a total of six municipal utilities and district heating suppliers. The suspicion: abusively excessive price increases. In particular, it concerns so-called price adjustment or price escalation clauses. Utilities use them to map the general market development, but also the costs for the respective energy source – i.e. gas or coal, but also wood, garbage, renewable energies or waste heat.
For example, it raises questions if a company has adjusted the district heating price to the development of the gas price, although other cheaper alternatives were actually used to generate heat.
So if not only gas was actually used to generate heat, but also waste was burned. Consumer advocates also criticize that the pricing of district heating producers can vary greatly from municipality to municipality. Tenants’ associations and consumer advocates also consider linking the district heating price to a stock market price to be inadmissible. Rather, consumers’ heating costs should be based on the real purchasing costs of district heating providers.
Consumer advocates sue Refunds
The Federal Association of Consumer Organizations is pursuing two class action lawsuits against the district heating providers E.ON and Hansewerk Natur due to enormous price increases in recent years. It’s about price increases of several hundred percent. The two companies deny the allegations. Exit open.
With the lawsuits, the consumer advocates want, on the one hand, to obtain refunds for customers and, on the other hand, to clarify fundamental questions regarding district heating supply. For example, how much does the price development on the heating market have to be taken into account in the calculation formulas? In the end, the verdict could point the way for other cases.
Association doesn’t see Transparency problem
Consumer advocates are calling for more transparency, including the so-called price escalation clauses. The district heating association AGFW describes these as important instruments.
If district heating suppliers did not have the opportunity to adjust the prices agreed at the start of the contract to changing circumstances, they would have to factor the expected risks into the heat price from the start.
The association does not see a transparency problem; the price determination is shown on the suppliers’ websites.
However, many customers were surprised by high heating bills. This cannot be explained by high energy prices alone, as fuels such as natural gas, coal and heating oil have recently been cheaper again. Opposite tagesschau.de the industry association refers to the so-called price escalation clauses, which are tied to certain natural gas price developments, for example.
There is always a certain delay effect. “What happened a year ago on the global energy price markets will ultimately only be passed on to district heating a year later. And vice versa: natural gas prices have calmed down again, which will ultimately lead to district heating prices falling in the near future “, writes a spokeswoman for the AGFW upon request. The association has now announced a platform that wants to disclose district heating prices in Germany.
District heating regulations should be reformed
The Federal Ministry of Economics also assumes that heat prices will continue to fall until mid-2024. The call for reforms for district heating has long since reached Minister Robert Habeck. The district heating regulation should be revised so that there are “overall attractive framework conditions for customers and suppliers for a favorable supply of district heating to consumers,” the ministry said tagesschau.de. Concrete details cannot be given at the moment, said a spokeswoman.
In addition to the heat pump, district heating will play a decisive role in climate-friendly heat in the future. Currently, around 14 percent of all households in Germany heat with district heating. The federal government wants to expand this significantly: in the medium term, 100,000 new households are to be connected to the district heating network every year.